Decisions:Decisions:
Knowing How to Make Decisions is Often MoreDecisions is Often More
Important Than The Decision.
John Reno, PMPProgram Engineering ManagerNorthrop Grumman, SLC, UThttp://www linkedin com/in/johnjreno
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http://www.linkedin.com/in/johnjreno05/19/2011
Early Decision ToolsEarly Decision Tools
Eeny, Meeny, Miny, Moe…
Pick a number between One and Ten:24
AgendaAgenda• Rational Decision Making Processg• Simon/Tannenbaum & Schmidt – 1973• Vroom-Yetton Decision Tool – 1988
Is time or quality of the decision the driver?– Is time or quality of the decision the driver?– When do you involve subordinates?
• The Elusive Sigmoid Curve– Unfreeze – Transition - Refreeze
• Roberto Strategic Decision Making Processes – 2005– Making Important Decisionsg p– What Biases Might We Have– Avoiding Decision Traps
• Finally the Last Word
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Finally, the Last Word
Rational Decision Making Process1Rational Decision Making Process1
• Most Models ofMost Models of Rational Decision Making Include
Determine Objectives
Identify Problemsthese Major Activities:
y
Gather and Evaluate Data
– Problem Definition– Obtaining Facts
Solution
List and Evaluate Alternatives
– Solution Identification
– Decision
Choose Best Alternative
Implement and Follow-Up
4Implementation
Implement and Follow-Up
Simon/Tannenbaum & SchmidtSimon/Tannenbaum & Schmidt1,6
5
Vroom/YettonVroom/Yetton
• Quality of a decision – is the decision the bestQuality of a decision is the decision the best that can be made with available information?
• Timeliness of a decision – Is there enough gtime available to resource and analyze the decision prior to implementation?
• Implementation – is there enough commitment and understanding to carry out the decision by h i d f i ?those assigned to perform it?
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Vroom 2001Vroom 20017
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Sigmoid CurveSigmoid Curve5
• Life has its cyclical ups d dand downs.
• Most decisions are made in reaction to a
d (B) hil thneed (B), while on the downward slope.– Bad Timing!
Best decisions are made• Best decisions are made when things are going well (A) you have momentum to carry youmomentum to carry you.– Great Timing!
• Regardless the Sigmoid Curve restarts a new
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Curve restarts a new cycle.
Unfreeze-Transition-RefreezeUnfreeze Transition Refreeze2
• Change brings “chaos” Transition Management Approach g gand unknowns, breaking assurances of past experience.
Transition Management Approach
p p– Even experts get lost
here.– Which is why people
don’t like change.• Gradually change gets
worked out.• Notice the Sigmoid
Curve.
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Making Great DecisionsMaking Great Decisions3
• Things to Recognize About Decisions:g g– Decisions are not events, they are processes.
Involving specific inputs and are all subject to various types of biases: Individual Group and Organizationaltypes of biases: Individual, Group and Organizational
– Decisions are not made in a “Decision Room.”– Politics is not abnormal, and it is always present in
decision making.– Social Pressures for conformity and a natural desire
for belonging distort our decision making.g g g– Quantitative analysis of financial key decisions are
useful, but rarely used as the driving factor in decision making
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making.
What Biases Might We HaveWhat Biases Might We Have• Overconfidence in Our Judgment.g• Sunk Cost Effects
– Cognitive Dissonance orProspect Theoryp y
• Recency Effect– Availability Bias – placing too
much emphasis upon what ismuch emphasis upon what isreadily available.
– Getting caught in a streak ofsuccess (or losses).
• Be careful to avoidcategorizing upon justone cause.
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o e cause
Avoiding Decision TrapsAvoiding Decision Traps
• We will be further looking at various AffectWe will be further looking at various AffectHeuristics which can alter our logic:
Confirmation Bias– Confirmation Bias– Anchoring Effect
Illusory Correlation– Illusory Correlation– Hindsight Bias
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Confirmation BiasConfirmation Bias
• Tendency to gather and rely on data andTendency to gather and rely on data and information that confirm our existing views, and avoid or downplay information.p y
• To fight the confirming bias:– Ask disconfirming questionsg q– Entertain and test multiple
hypothesis– Engage in Contrarian Analysis– Probe the logic of experts
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Anchoring BiasAnchoring Bias• We sometimes allow an initial reference point to distort
ti t W b i i th t f i t d thour estimates. We begin in that reference point and then adjust from there, even if the initial reference point is completely arbitrary.C b ti th h i bi• Combating the anchoring bias:– Be aware of it!– Provide a range first, not a single value.
Work with multiple anchors– Work with multiple anchors.– Avoid only considering incremental scenarios.– Always remain open to new data.
• Think of a number between One and Ten.
H f i k d ?414
How many of you picked ?4
Illusory BiasIllusory Bias
• Illusory bias is when we jump toIllusory bias is when we jump to conclusions about the relations between two variables when no relationship actually p yexists.
• Combating the illusoryg ybias:– Again, be aware of it!– Always remain open
to new data.
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Combating Cognitive BiasesCombating Cognitive Biases
• Become more aware of these biasesBecome more aware of these biases.• Review past work to determine if you are
particularly vulnerable to these biasesparticularly vulnerable to these biases.• Get rapid feedback on decisions• Tap into unbiased experts.• Encourage effective group dynamics.g g p y
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Deciding How to DecideDeciding How to Decide4
Decision Process Decision OutcomesManagerial Levers
MultipleAlternatives
Assumption
CompositionDecisionQuality
Testing
Dissent&
Debate
ContextImplementationEffectiveness
Timeliness/S dDebate
ConflictManagement
CommunicationSpeed
Control
Learning Process
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Learning Process
ReferencesReferences1. Hitt, Michael A., Middlemist, R. Dennis, and Mathis, Robert L. 1989. Management;
Concepts and Effective Practice Saint Paul MN: West Publishing CompanyConcepts and Effective Practice. Saint Paul, MN: West Publishing Company.
2. Reno, J. 2005. Planning and Implementing Successful Organizational Change Projects. Salt Lake City, Utah. Downloaded February 23, 2006 from http://www.prepare4action.com.
3. Roberto, M. 2005. Why Great Leaders Don’t Take Yes for an Answer. Upper Saddle River, NJ: Wharton School Publishing.
4. Roberto, M. 2009. The Art of Critical Decision Making. Chantilly, VA. The Teaching Company.
5. Sidorowicz, R. 2005. Life Beyond the Sigmoid Curve. Etobicoke, Ontario, Canada. Downloaded July 5, 2005 from http://www.refresher.com/!paradox.html.
6. Stoner, James A., Freeman, Edward R. 1992. Management. Fifth Ed. Englewood Cliffs NJ: Prentice HallCliffs, NJ: Prentice Hall.
7. Vroom, V. 2001. Leadership and Decision Making. Yale University. Downloaded February 22, 2011 from http://www.lederne.dk/NR/rdonlyres/E8715858-DCEE-4355-88BB-B3E82FE7DA9B/0/18VictorVroom2.pdf.
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